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Boeing to boost 777 output; 787 pressure seen

Atlanta, December 21, 2010

A delivery delay of possibly six months or more could be announced for Boeing’s 787 Dreamliner aircraft, said at least one market watcher citing a published report.

He added that the plane maker also said it will increase its 777 wide-body production rate.

The production hike will be based on strong global demand, the second output boost for that programme announced this year, Boeing is studying the delivery schedule for the 787 and making design changes to the carbon-composite aircraft following a fire aboard a test flight last month that led to the grounding of the 787 test fleet.

A weekend Seattle Times report said a delivery delay for the 787 could be announced by Christmas and cited other manufacturing problems. The report, which quoted people who work on the plane and were given anonymity, also said the US Federal Aviation Administration has raised the possibility with Boeing that the 787 might not obtain certification for long-distance flights between continents.

'They may delay the 787 by more than six months; (that) was a story in the Seattle Times,' Stephen Massocca, managing director at Wedbush Morgan in San Francisco, said on Monday.

Wedbush Securities analyst Kenneth Herbert said in a note to clients on Monday that while the 777 output increase showed the strength of the global aerospace market, 'the near-term 787 issues will continue to drive sentiment on Boeing stock.'

Boeing: working on 787 solution

Boeing said in a statement on Monday that it was working on a solution that would permit 787 test flights to resume.

'We're working a revised program schedule that will accommodate the known issues and discoveries on the program -- including the work backlog that exists in the factory -- as well as the remainder of flight test and certification,' Yvonne Leach with Boeing 787 Program Communications said in an email. 'We expect to finalize it in the coming weeks.'

Leach said the Seattle Times article overall was 'valid in its assessment of the challenges' the 787 program faced.

'We have always acknowledged that new airplane programs are difficult and that bringing innovation to the market takes hard work,' she added.

Shares of Boeing have fallen more than 8 per cent since the fire incident that led it to halt 787 test flights. They were down $1.87 to $63.16 in afternoon trading.

Also on Monday, Boeing said production of the wide-body 777 would rise to 8.3 per month in the first quarter of 2013. In March, the company had announced it would boost output to seven planes from five a month starting in mid-2011.

Boeing and EADS unit Airbus suffered a slump in orders in 2008 and 2009 amid the recession. Now, demand is resuming as air traffic trends recover. – Reuters